Oil prices crash as Trump and defense head Hegseth give conflicting accounts of Iran campaign

As markets responded to President Donald Trump’s remarks regarding the ongoing U.S.-Iran conflict and mounting fears over shipments through the Strait of Hormuz, oil prices plummeted sharply on Tuesday, falling as much as 10% during intraday trading.

Trump said the U.S. military was on an “excursion” in Iran rather than a prolonged war, easing fears of endless conflict and triggering the oil price collapse.

U.S. crude dropped to about $91 per barrel, while Brent crude dropped to about $94.62. That followed Monday’s spike in both benchmarks above $100 a barrel, with prices momentarily approaching $120, a level not seen since Russia invaded Ukraine four years prior.

The wild swings made Tuesday one of the most turbulent trading days in recent memory for oil markets.

The sell-off picked up after Trump held a press conference at his Trump National Doral club, where he said the military campaign against Iran, launched alongside Israel on Feb. 28, had achieved major results.

Nine days into the conflict, he told reporters that the U.S. had made “major strides” toward its goals.

“We’ve wiped every single force in Iran out, very completely,” Trump said, adding that more than 50 Iranian naval ships had been destroyed and air defenses had been taken out.

“They have no leadership. It’s all been blown up.” He stopped short of saying the war would end this week, but predicted it would be over “very soon.” He called it “a military success, the likes of which people haven’t seen.”

Strait of Hormuz keeps markets on edge

The Strait of Hormuz, a tiny waterway that handles approximately 31% of all oil delivered by sea worldwide, continued to worry traders. Iranian officials issued a warning on Monday that if attacks on Iran persisted, tankers traveling through the strait might be attacked.

Tehran would not permit “one litre of oil” to depart if the military campaign continued, according to an Islamic Revolutionary Guard Corps spokesman.

Trump retaliated harshly on Truth Social, threatening to strike back “TWENTY TIMES HARDER” than before if Iran blocked oil flows. He called the U.S. military activity a “gift” to nations like China, who import energy from the canal.

In addition, he said that the war would make oil supplies safer in the long run and that he was “thinking about taking over” the strait.

Emergency reserves and Iran’s response

Another factor pulling prices down was the prospect of a major release of emergency oil reserves. Energy ministers from the G7 group of nations and the International Energy Agency are in talks about tapping into a combined stockpile of 1.2 billion barrels.

According to sources familiar with the discussions, Washington is pushing for a release of between 300 million and 400 million barrels, somewhere between 25% and 30% of total reserves.

IEA Executive Director Fatih Birol said all options are on the table to deal with the supply shock. Bob McNally, an analyst at Rapidan Energy Group, said the market saw a “collapse in oil prices on what we used to call verbal intervention from the President,” as investors began betting that tanker traffic through the strait would eventually resume.

Iran, however, pushed back on Trump’s account of the war. The Revolutionary Guards said it was “we who will determine the end of the war,” and called Trump’s statements “false claims” designed to mislead the public. The Guards also said they had taken out 10 advanced U.S. radar systems and a number of drones.

Back home, Trump brushed off an apparent conflict with Defense Secretary Pete Hegseth, who had said the war was “just beginning.” Trump said that referred to the start of “building a new country.” Israeli Prime Minister Benjamin Netanyahu said the campaign was “breaking their bones,” while Israel’s ambassador to France said forces were “ahead of schedule.”

UK wholesale gas prices also fell more than 10% Tuesday morning, tracking the drop in oil. But Brent crude is still trading well above its pre-conflict price of $73 a barrel. Energy experts cautioned that even if fighting stopped today, disruptions to supply chains and damaged infrastructure could take weeks to sort out.

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